ERICSSON (LM) TEL-SP ADR (ERIC) Stock Fundamental Analysis
NASDAQ:ERIC - Nasdaq - US2948216088 - ADR - Currency: USD
We assign a fundamental rating of 5 out of 10 to ERIC. ERIC was compared to 51 industry peers in the Communications Equipment industry. ERIC has an average financial health and profitability rating. ERIC has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
ERIC had positive earnings in the past year.
In the past year ERIC had a positive cash flow from operations.
Of the past 5 years ERIC 4 years were profitable.
Each year in the past 5 years ERIC had a positive operating cash flow.
1.2 Ratios
With a decent Return On Assets value of -0.50%, ERIC is doing good in the industry, outperforming 66.00% of the companies in the same industry.
The Return On Equity of ERIC (-1.58%) is better than 64.00% of its industry peers.
Looking at the Return On Invested Capital, with a value of 10.37%, ERIC belongs to the top of the industry, outperforming 84.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -0.5% | ||
| ROE | -1.58% | ||
| ROIC | 10.37% |
ROA(3y)N/A
ROA(5y)N/A
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)N/A
ROIC(5y)N/A
1.3 Margins
In the last couple of years the Profit Margin of ERIC has declined.
ERIC has a better Operating Margin (8.16%) than 78.00% of its industry peers.
ERIC's Operating Margin has declined in the last couple of years.
ERIC's Gross Margin of 43.44% is in line compared to the rest of the industry. ERIC outperforms 58.00% of its industry peers.
In the last couple of years the Gross Margin of ERIC has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 8.16% | ||
| PM (TTM) | N/A | ||
| GM | 43.44% |
OM growth 3Y-36.4%
OM growth 5Y-5.54%
PM growth 3Y-90.62%
PM growth 5Y-61.69%
GM growth 3Y1.11%
GM growth 5Y3.7%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), ERIC is creating some value.
There is no outstanding debt for ERIC. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
2.2 Solvency
ERIC has a debt to FCF ratio of 1.11. This is a very positive value and a sign of high solvency as it would only need 1.11 years to pay back of all of its debts.
With a decent Debt to FCF ratio value of 1.11, ERIC is doing good in the industry, outperforming 72.00% of the companies in the same industry.
A Debt/Equity ratio of 0.44 indicates that ERIC is not too dependend on debt financing.
With a Debt to Equity ratio value of 0.44, ERIC is not doing good in the industry: 68.00% of the companies in the same industry are doing better.
Although ERIC does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.44 | ||
| Debt/FCF | 1.11 | ||
| Altman-Z | N/A |
ROIC/WACC1.5
WACC6.93%
2.3 Liquidity
ERIC has a Current Ratio of 1.19. This is a normal value and indicates that ERIC is financially healthy and should not expect problems in meeting its short term obligations.
ERIC has a Current ratio of 1.19. This is amonst the worse of the industry: ERIC underperforms 80.00% of its industry peers.
A Quick Ratio of 0.95 indicates that ERIC may have some problems paying its short term obligations.
ERIC's Quick ratio of 0.95 is on the low side compared to the rest of the industry. ERIC is outperformed by 78.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.19 | ||
| Quick Ratio | 0.95 |
3. Growth
3.1 Past
The earnings per share for ERIC have decreased strongly by -60.46% in the last year.
The earnings per share for ERIC have been decreasing by -17.01% on average. This is quite bad
ERIC shows a decrease in Revenue. In the last year, the revenue decreased by -5.87%.
ERIC shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 1.76% yearly.
EPS 1Y (TTM)-60.46%
EPS 3Y-38.27%
EPS 5Y-17.01%
EPS Q2Q%22.54%
Revenue 1Y (TTM)-5.87%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%1.44%
3.2 Future
Based on estimates for the next years, ERIC will show a very strong growth in Earnings Per Share. The EPS will grow by 45.48% on average per year.
The Revenue is expected to grow by 4.46% on average over the next years.
EPS Next Y292.93%
EPS Next 2Y100.23%
EPS Next 3Y66.47%
EPS Next 5Y45.48%
Revenue Next Year3.62%
Revenue Next 2Y3.08%
Revenue Next 3Y1.98%
Revenue Next 5Y4.46%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 49.44, which means the current valuation is very expensive for ERIC.
The rest of the industry has a similar Price/Earnings ratio as ERIC.
The average S&P500 Price/Earnings ratio is at 29.63. ERIC is valued rather expensively when compared to this.
With a Price/Forward Earnings ratio of 12.60, ERIC is valued correctly.
Based on the Price/Forward Earnings ratio, ERIC is valued cheaply inside the industry as 86.00% of the companies are valued more expensively.
When comparing the Price/Forward Earnings ratio of ERIC to the average of the S&P500 Index (22.68), we can say ERIC is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 49.44 | ||
| Fwd PE | 12.6 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, ERIC is valued cheaper than 88.00% of the companies in the same industry.
ERIC's Price/Free Cash Flow ratio is rather cheap when compared to the industry. ERIC is cheaper than 96.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 7.17 | ||
| EV/EBITDA | 8.75 |
4.3 Compensation for Growth
ERIC's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
A more expensive valuation may be justified as ERIC's earnings are expected to grow with 66.47% in the coming years.
PEG (NY)0.17
PEG (5Y)N/A
EPS Next 2Y100.23%
EPS Next 3Y66.47%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.17%, ERIC has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 11.69, ERIC pays a better dividend. On top of this ERIC pays more dividend than 90.00% of the companies listed in the same industry.
ERIC's Dividend Yield is a higher than the S&P500 average which is at 2.29.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.17% |
5.2 History
On average, the dividend of ERIC grows each year by 21.64%, which is quite nice.
ERIC has paid a dividend for at least 10 years, which is a reliable track record.
ERIC has not decreased its dividend in the past 5 years, so it has a somewhat stable track record.
Dividend Growth(5Y)21.64%
Div Incr Years5
Div Non Decr Years5
5.3 Sustainability
ERIC has negative earnings and hence a negative payout ratio. The dividend may be in danger.
The dividend of ERIC is growing, but earnings are growing more, so the dividend growth is sustainable.
DP-667.4%
EPS Next 2Y100.23%
EPS Next 3Y66.47%
7.91
-0.1 (-1.25%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryCommunications Equipment
Earnings (Last)
Earnings (Next)
Inst Owners40.83%
Inst Owner Change27.54%
Ins Owners0.05%
Ins Owner ChangeN/A
Market Cap26.36B
Analysts55.86
Price Target7.77 (-1.77%)
Short Float %1.36%
Short Ratio2.46
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.17% |
Yearly Dividend2.7
Dividend Growth(5Y)21.64%
DP-667.4%
Div Incr Years5
Div Non Decr Years5
Ex-DateN/A
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-284.38%
Min EPS beat(2)-588.91%
Max EPS beat(2)20.16%
EPS beat(4)3
Avg EPS beat(4)-94.09%
Min EPS beat(4)-588.91%
Max EPS beat(4)160.39%
EPS beat(8)6
Avg EPS beat(8)-34.73%
EPS beat(12)7
Avg EPS beat(12)-23.13%
EPS beat(16)9
Avg EPS beat(16)-15.73%
Revenue beat(2)1
Avg Revenue beat(2)0.49%
Min Revenue beat(2)-0.69%
Max Revenue beat(2)1.67%
Revenue beat(4)1
Avg Revenue beat(4)-2.16%
Min Revenue beat(4)-7.15%
Max Revenue beat(4)1.67%
Revenue beat(8)3
Avg Revenue beat(8)-1.03%
Revenue beat(12)7
Avg Revenue beat(12)-0.09%
Revenue beat(16)8
Avg Revenue beat(16)-1.07%
PT rev (1m)3.49%
PT rev (3m)2.88%
EPS NQ rev (1m)-1.87%
EPS NQ rev (3m)-1.87%
EPS NY rev (1m)4.27%
EPS NY rev (3m)4.27%
Revenue NQ rev (1m)0.32%
Revenue NQ rev (3m)0.32%
Revenue NY rev (1m)0.15%
Revenue NY rev (3m)0.29%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 49.44 | ||
| Fwd PE | 12.6 | ||
| P/S | 1.14 | ||
| P/FCF | 7.17 | ||
| P/OCF | 6.52 | ||
| P/B | 3.25 | ||
| P/tB | 12.79 | ||
| EV/EBITDA | 8.75 |
EPS(TTM)0.16
EY2.02%
EPS(NY)0.63
Fwd EY7.94%
FCF(TTM)1.1
FCFY13.95%
OCF(TTM)1.21
OCFY15.34%
SpS6.93
BVpS2.43
TBVpS0.62
PEG (NY)0.17
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -0.5% | ||
| ROE | -1.58% | ||
| ROCE | 13.12% | ||
| ROIC | 10.37% | ||
| ROICexc | 15% | ||
| ROICexgc | 38.29% | ||
| OM | 8.16% | ||
| PM (TTM) | N/A | ||
| GM | 43.44% | ||
| FCFM | 15.92% |
ROA(3y)N/A
ROA(5y)N/A
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)N/A
ROIC(5y)N/A
ROICexc(3y)N/A
ROICexc(5y)N/A
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)N/A
ROCE(5y)N/A
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3YN/A
ROICexc growth 5YN/A
OM growth 3Y-36.4%
OM growth 5Y-5.54%
PM growth 3Y-90.62%
PM growth 5Y-61.69%
GM growth 3Y1.11%
GM growth 5Y3.7%
F-Score4
Asset Turnover0.91
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.44 | ||
| Debt/FCF | 1.11 | ||
| Debt/EBITDA | 1.23 | ||
| Cap/Depr | 36.02% | ||
| Cap/Sales | 1.59% | ||
| Interest Coverage | 6.62 | ||
| Cash Conversion | 139.28% | ||
| Profit Quality | N/A | ||
| Current Ratio | 1.19 | ||
| Quick Ratio | 0.95 | ||
| Altman-Z | N/A |
F-Score4
WACC6.93%
ROIC/WACC1.5
Cap/Depr(3y)39.65%
Cap/Depr(5y)46.92%
Cap/Sales(3y)1.94%
Cap/Sales(5y)2.02%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)-60.46%
EPS 3Y-38.27%
EPS 5Y-17.01%
EPS Q2Q%22.54%
EPS Next Y292.93%
EPS Next 2Y100.23%
EPS Next 3Y66.47%
EPS Next 5Y45.48%
Revenue 1Y (TTM)-5.87%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%1.44%
Revenue Next Year3.62%
Revenue Next 2Y3.08%
Revenue Next 3Y1.98%
Revenue Next 5Y4.46%
EBIT growth 1Y-13.58%
EBIT growth 3Y-35.01%
EBIT growth 5Y-3.88%
EBIT Next Year79.02%
EBIT Next 3Y30.29%
EBIT Next 5Y16.92%
FCF growth 1Y536.89%
FCF growth 3Y7.36%
FCF growth 5Y33.08%
OCF growth 1Y243.37%
OCF growth 3Y5.8%
OCF growth 5Y22.35%